Earnings Roundup: Applied Micro hits estimates, lowers guidance

Applied Micro Circuits was one of several chip and chip-equipment companies to report earnings after the bell Tuesday and lower sales and earnings estimates for the next quarter.

Communications chipmaker Applied Micro met analysts' reduced earnings estimates in its fourth quarter Tuesday but dramatically reduced its sales and earnings estimates for the first quarter.

In the quarter, Applied Micro earned $28.3 million, or 9 cents a share, on sales of $121.1 million.

Following its profit warning earlier this quarter, analysts' reduced the First Call consensus estimate to a profit of 9 cents a share and sales of $124.5 million.

Applied Micro (Nasdaq: AMCC) shares closed off $1.62 to $23.98 ahead of the earnings report Tuesday before falling to $23.79 in after-hours trading.

"Obviously this was a very difficult quarter," said Chief Executive Officer David Rickey during a conference call with analysts. "What started out as a very good quarter in January came unglued as the quarter progressed."

The $121.1 million in sales represents a 112 percent improvement from the year-ago quarter when it pocketed $21 million, or 8 cents a share, on sales of $57 million.

But totals sales fell 15 percent from the fourth quarter when it made $48.1 million, or 16 cents a share, on sales of $143.3 million.

Slumping orders from customers such as Nortel Networks (NYSE: NT), Cisco Systems (Nasdaq: CSCO) and JDS Uniphase (Nasdaq: JDSU) contributed mightily to the sequential sales decline.

"Right now, visibility into the (first) quarter is very poor," Rickey said. "We believe the June quarter will be the low-water mark although we can't be completely sure."

Rickey told analysts to expect first-quarter sales of between $70 million and $85 million and earnings of between breakeven and 2 cents a share.

First Call consensus was expecting a profit of 7 cents a share on sales of $107 million.

Applied Micro and other semiconductor stocks were tagged Monday by a downgrade from Merrill Lynch, which suggested that while the stocks had gained ground in recent weeks these companies had yet to see the worst of this economic slowdown.

Applied Micro's shares rallied up to a 52-week high of $109.75 in October before plunging to a low of $11.25 earlier this month.

Fifteen of the 19 analysts tracking the stock rate it either a "buy" or "strong buy."

Applied Micro wasn't the only semiconductor company to scale back sales and earnings estimates after the bell Tuesday.

LSI Logic
LSI Logic (NYSE: LSI) met analysts' estimates in its first quarter Tuesday but also lowered estimates for the second quarter.

LSI earned $9.5 million, or 3 cents a share, on sales of $517 million.

First Call consensus expected it to earn 3 cents a share on sales of $524.4 million.

Its shares closed off 40 cents to $19.50 ahead of the earnings report.

The $517 million in sales marks a 16 percent decline from the year-ago quarter when it earned $88 million, or 26 cents a share, on sales of $615 million.

Chief Executive Officer Wilfred Corrigan told analysts that second-quarter sales will likely fall between 10 percent and 15 percent from the first quarter and that it will post a loss of 7 cents a share.

Analysts were projecting sales of $479 million and a profit of 1 cent a share.

"I believe Q2 will be the bottom of this cycle and revenues will begin to improve modestly in the second half for LSI, gathering in momentum as we enter 2002," Corrigan said during a conference call with analysts.

Varian Semiconductor
Varian Semiconductor (Nasdaq: VSEA) missed analysts' estimates in its second quarter, announced it would lay off 10 percent of its work force and lowered estimates for its third quarter.

The chip-equipment maker posted a profit of $18 million, or 53 cents a share, on sales of 173 million.

First Call consensus pegged it for a profit of 60 cents a share on sales of $206 million.

"Our short-term expectations reflect industry uncertainty, and in these unsettled times we believe that a conservative stance is best," said Chief Financial Officer Robert Halliday in a prepared release. "We anticipate that third quarter revenue will decline approximately 25 percent from the level of the same quarter last year. In addition, given the declining volume, we expect continuing pressure on our gross margin."

Varian shares closed off $2.85 to $40.77 ahead of the earnings report before sliding to $37.30 in after-hours trading.

In the year-ago quarter, it earned $21 million, or 61 cents a share, on sales of $156 million.

Fairchild Semiconductor
Fairchild Semiconductor (NYSE: FCS) managed to top analysts' estimates in its first quarter, but predicted a 5 percent sequential decline in sales next quarter.

In the quarter, Fairchild earned $26.1 million, or 26 cents a share, on sales of $385.3 million.

Analysts were expecting a profit of 22 cents a share on sales of $375 million.

Chief Financial Officer Joe Martin said that while the company remains "very positive" about its long-term outlook, it still expects second-quarter sales to be "flat to down 5 percent" from the first quarter.

He added that gross profit margins will likely fall 0.4 percent but that margins should improve in the second half of this year.

In the year-ago quarter, Fairchild posted a profit of $52.6 million, or 53 cents a share, on sales of $401.7 million.

Its shares closed off 8 cents to $17.09 ahead of the earnings report.